George Mudie: Olivant and Virgin were given preferred bidder status on the basis of a main feature of their bid being repayment of £10 to 15 billion-worth of debt. Now that that has disappeared, if another private sector bid comes in and, not having had months of scrutiny of Northern Rock's books, expresses a wish for the 4 February deadline to be shifted slightly, will the Chancellor look positively on that reasonable request?

Michael Fabricant: I thank the Minister for her enthusiastic answer. Does she recall that in 1998 the then Chancellor of the Exchequer, now our Prime Minister, said:
	Money will be released only if Departments keep to their plans."—[ Official Report, 14 July 1998; Vol. 316, c. 188.]
	He said that in respect of public service agreements. Is she aware that the HMRC capability review says that only three out of 10 targets are likely to be reached? If that is the case, how much money will now be withheld from HMRC?

Alistair Darling: With your permission, Mr. Speaker, I would like to make a short statement on capital gains tax reform.
	Following discussion, I am today announcing the introduction of a new capital gains tax entrepreneurs relief. This will complement the new regime, which I set out in the pre-Budget report last year. The reformed regime and the new entrepreneurs relief will come into effect in April.
	The relief will provide a special 10 per cent. tax rate for the first £1 million of qualifying gains. Gains made on different occasions will qualify for the 10 per cent. rate up to a cumulative lifetime total of £1 million. However, gains in excess of that will be taxed at 18 per cent. The special 10 per cent. rate will be available on the disposal of all or part of a trading business carried on by an individual either alone or in partnership. It will also be available to individuals disposing of shares in a trading company, provided that the individual is an officer or employee of the company and takes a minimum 5 per cent. stake in the business. The measure will benefit the owners of small businesses when they choose to sell their business, as well as business angels and other business investors who take a 5 per cent. or greater stake in the company concerned.
	As a result of the reforms that I have announced, entrepreneurs and material business investors will keep 90 per cent. of the first £1 million of gains that they make. And they, and everyone else, remain entitled to make gains of up to £9,200 a year without paying any capital gains tax. That annual exemption will rise again in April.
	We estimate that, next year, around 80,000 business owners and investors will make disposals eligible for the entrepreneurs relief. In approximately 90 per cent. of those cases, we expect the individual's entire gain to be taxed at the special 10 per cent. rate.
	In the other cases, people will pay 10 per cent. on the first £1 million of gains and the standard 18 per cent. rate on the excess. The proposal remains in line with the Government's objective of keeping the tax system as simple as possible. It is very much in accordance with representations from small business.
	I estimate that the proposal will cost around £200 million a year. Her Majesty's Revenue and Customs is today issuing further information about the scope of the new relief, along with draft legislation and supporting materials related to the capital gains tax proposals announced in the pre-Budget report. Those documents have been deposited in the Libraries of both Houses and are available on the HMRC website.
	As with all other aspects of the tax regime, I am determined that we do as much as possible to encourage entrepreneurship in this country and, in future Budgets, I will seek to do more. I will therefore keep the £1 million lifetime limit for the entrepreneurs' relief under review.
	I can confirm that we have retained the full range of reliefs for people investing in smaller, unquoted companies, including the enterprise investment scheme and venture capital trusts. Rollover relief also remains available to people wishing to reinvest in another business. Taken together, those measures include generous income tax reliefs, capital gains tax reliefs and exemptions, which have helped thousands of businesses. We have also retained several tax advantaged share schemes, which include save-as-you-earn schemes, company share options plans and enterprise management incentives.
	In December last year, the Treasury and HMRC issued a consultation document, which included legislation designed to prevent individuals from disguising income streams as a capital return to avoid tax. I will set out the Government's next steps on measures to prevent abuse of the tax rules when the consultation process has concluded. I want to be satisfied that only genuine investors benefit from the reformed capital gains tax regime.
	I have also received representations from the life insurance industry. That is a complex area and there are no clear answers, but we are ready to hear further representations.
	The UK business environment remains one of the best in the world. I am determined to keep it that way. My announcement today, with measures to simplify the regime, will ensure that that continues to be the case. I commend the statement to the House.

Alistair Darling: I think the real answer to the problem that the hon. Gentleman has raised—and the shortage of housing is undoubtedly a problem in rural areas, as it is in urban areas—is for us to recognise the need to increase the supply of housing as a whole. I hope that Members in all parts of the House will support the Government's measures both to encourage more housing and to reform the planning laws, otherwise we shall continue to experience the problem of far more people needing housing than there are houses, which will force prices up. It is important for us to recognise the fundamental problems that we face in this country.

Theresa May: I thank the Leader of the House for giving us the forthcoming business. Today the House finally sees the motions for Monday's debate on procedure relating to the European Union (Amendment) Bill and debates on the Lisbon treaty. Labour Back Benchers, however, have had this knowledge for days, courtesy of a document circulated by the Government Chief Whip. The Leader of the House has given us two weeks' business, but according to the list that I have, Labour Back Benchers know the dates of business until the end of February. If they know, why does the Leader of the House not have the courtesy to tell the whole House?
	This morning the Home Secretary appeared on the "Today" programme giving details of the Counter-Terrorism Bill before it was published for Members of the House. Yet again, the Government have put the media before Parliament. Every week the Leader of the House tells us that she puts Parliament first, and every week her colleagues treat Parliament with disdain.
	Last week I asked the Leader of the House about issues of vital importance to Members and the public. Instead of responding properly, she said,
	"if there is a bandwagon, she will jump on it and if there is a myth, she will peddle it."—[ Official Report, 17 January 2008; Vol. 470, c. 1079.]
	I had raised Northern Rock, organ donation and the security of personal data. Which of those issues does the Leader of the House consider to be a bandwagon or a myth?
	In view of the recent downturn in international financial markets, may I suggest the state of the British economy as a subject for a future topical debate? On Monday the Secretary of State for Defence announced that the Ministry of Defence had lost a laptop containing the bank details of 3,700 army applicants. It lost a further two laptops containing personal data on Tuesday, and yesterday the Ministry of Justice announced that it had lost four CDs containing the restricted data of court defendants, witnesses and victims. When will we have a debate on the Government's systemic failure to protect our personal information?
	Given this record on data management—or mismanagement—it is no surprise that within two weeks, the Prime Minister has changed his mind and delayed the introduction of the identity card scheme; and we have learned today that two companies have pulled out of the procurement process for the scheme, including Accenture, the very company the Minister for Borders and Immigration used to work for. This is a shambles. The scheme is clearly in administration and should be liquidated. When will the Home Secretary come to the House and make a statement on the ID card scheme?
	As a London MP, the right hon. and learned Lady will be aware of the concern being raised about the Mayor of London. Does she not find it extraordinary that the Mayor has defended his senior staff using their paid time to run a smear campaign against Trevor Phillips? May we have a debate on the abuse of power by Mayor Livingstone?
	The Prime Minister has written a book about courage: it was clearly not an autobiography. He did not have the courage to sign up to the EU reform treaty alongside other leaders, he did not have the courage to vote for the Bill on the treaty on Second Reading, and he has not had the courage to give the British people a referendum. So can we have a debate on courage and leadership?
	We have a Prime Minister who dithers, delays and dodges on matters of crucial importance to our country. When will he finally get a grip and start running the country, instead of running away from difficult decisions?

William McCrea: There is no confidence in the Northern Ireland community that policing and justice will be devolved to the Northern Ireland Assembly—and certainly not in the lifetime of the present Assembly. In addition, there seems to some confusion in the mind of the Secretary of State for Northern Ireland about the devolution of those powers. Will the Leader of the House therefore find time for a debate on that very important and topical subject?

Harriet Harman: I do not accept that there is confusion in the mind of my right hon. Friend the Secretary of State about that matter, but I shall draw the hon. Gentleman's comments to his attention. I shall ask my right hon. Friend to write to the him, and to place a copy of the letter in the House of Commons Library.

Harriet Harman: I shall draw the hon. Gentleman's remarks to the attention of my right hon. Friend the Secretary of State for Business, Enterprise and Regulatory Reform. In the meantime, I suggest that he seeks a meeting with senior Post Offices managers, so that he can present his constituents' concerns about services.

Mark Pritchard: This year's budget deficit is already £44 billion, inflation—not calculated according to the retail prices index—is running at 11 per cent., and every household in the country has been lumbered with a second mortgage as a result of the Northern Rock saga. Is not it time, therefore, for an urgent debate on the Government's handling of the British economy, given that every household and business is paying more in tax?

Chris Mullin: My right hon. and learned Friend is very kind. Is it not desirable that, whatever formula the Baker review comes up with, it is comprehensible to the outside world? One reason why we have got into such difficulties in the past is that we have come up with arcane formulae, usually linking us to civil service grades that have eventually been abolished, as a result of which we have found ourselves back in the same old situation. When she talks to Sir John Baker, will she invite him to link our fortunes with those of some of our humbler constituents so that the outside world can understand his recommendations.

Theresa May: I suspect that that would blast through the Government's pay policy in no uncertain terms. I am tempted to say that it would be better if I did not refer in this House to any sort of support for Jeremy Paxman, given what he has said recently.
	The way in which MPs pay is reported in the press is an important issue. We consistently see the misreporting of the amounts of money that MPs "earn" in this House by the addition to our basic salaries of the budgets that we have to pay for our staff and in order to run our offices. Indeed, only last week  The Daily Telegraph set out a table that included average staff salaries and average expenditure on offices alongside average travel expenses and the average additional costs allowance, under the heading "MPs' Gravy Train".
	We must find a way to get away from that image, so that people understand the difference between pay that a MP receives, in the way any other employed person receives a salary or wage, and the money necessary for us to do our job for our constituents. The SSRB has proposed a change in terminology. This issue is important, and I support the proposal that the MEC should consider the arrangements for allowances. This matter is one that the MEC should take on board when it considers the SSRB's specific proposals on allowances.

Theresa May: I am grateful to my hon. Friend for that.
	The SSRB made a proposal relating to the audit of allowances, which I assume will be part of the MEC's consideration of the such matters. I chair the House of Commons Audit Committee, and the House must consider that issue seriously. I am not sure that the SSRB's proposal is necessarily the right way forward, but the MEC will need to look at it and consider it carefully. On resettlement grants, the SSRB does not quite understand what is likely to happen if such grants are not suddenly made available to hon. Members who retire, or resign from their seats. Willie Hamilton is the name that comes to mind—the individual who stood for a seat that he was not going to get in order to qualify for a grant. The SSRB has perhaps not quite understood the full implications of what they are proposing.
	I support the Government's proposals on pay restraint, and I encourage other Members to do so. Albeit with concerns about Sir John Baker doing it, I support the concept of a review to find another mechanism for determining MPs' pay, but there is value in the amendment of my right hon. Friend the Member for Penrith and The Border, suggesting that the House should consider that issue as well. This is an opportunity for us to change the approach taken to how we deal with our pay and the view that the public have of MPs. I hope that all hon. and right hon. Members will grasp that opportunity and, in due course, make changes that enable us to present a better image, with, I hope, the assistance of the media through their accurate reporting on what is done with regard to MPs' pay and budgets.

John Spellar: It might be helpful if we clarified what is being proposed, otherwise we might be going down a blind alley. As I understand it, the Government are asking Baker to examine the next couple of years and then to consider a mechanism that would, in effect, be an automatic indicator, which the Department of Finance and Administration would get from the national statistician or whoever else and would then implement. The other body would deal only with that mechanism, should there be a situation similar to the one involving the civil service pay link breaking down, and should there need to be a reassessment and a new indicator. I hope that I have got that right. If so, some of the concerns that are being raised by the hon. Gentleman—although not all of them—will be addressed. We are not talking about a report coming back; we are talking about an indicator, and that matter is in the public domain.

Simon Hughes: I absolutely understand that. That is why I support the proposal that the administration of this matter, including its interpretation, should go to the Members Estimate Committee, as recommended in the motion. The proposal should be subject to that process, but it should not be subject to a delay in respect of the year to which it applies. There is no significant difference between the hon. Gentleman and me. The decision should apply from 1 April, but the details of definition need to be worked out fairly.
	The hon. Member for Cities of London and Westminster (Mr. Field) rightly identified that all the recommendations bar one have been dealt with. Three relate to staff and we are asked to agree to them, while we are asked to refer the rest to the MEC and other deliberative bodies. One, however, has been dropped and eliminated. I declare an interest in the matter, but I cannot help it because I am an MP representing an inner-London constituency.
	Presently, inner-London MPs and outer-London MPs may opt for a London allowance in line with many other London public sector workers, as opposed to an alternative that in theory is more generous. The Senior Salaries Review Body report says under the heading of "London Supplement" in paragraphs 5.58 and 5.59:
	"The Supplementary London Allowance... which is currently set at £2,812 is payable to MPs with inner London constituencies who are not eligible to receive ACA and to MPs with outer London constituencies who do not claim for expenditure under the ACA."
	It goes on to say that comparable circumstances were looked into and it concludes:
	"We believe that the London Supplement should be increased to reflect the extra living costs found in London and therefore recommend that the London Supplement be increased to £3,500 and henceforth... in line with the Public Sector Average Earnings Index".
	That must surely be included in the basket for consideration; it is nonsense to take that out altogether as if it were not a serious issue. It is an issue for Greater London MPs of all parties. I hope that colleagues will vote accordingly and that the Government will accept it.

Simon Hughes: Well— [Interruption.] I will gave way to the hon. Gentleman, whom I respect, but I am saying only that the current position needs to be reviewed, which is the clear implication of the report. None of my outer-London Liberal Democrat colleagues claim it; though some Members claim it when they live very near to the borders of inner and outer London. I am simply asking for it to be reviewed because, in my judgment, that is what has brought the House into the greatest disrepute, so it needs to be sorted. That is all; I am arguing no more than that.

John Spellar: I shall concentrate my remarks largely on pay, because the section on allowances has in the main been referred through the Members Estimate Committee to our panel. We wish to evaluate those suggestions properly without preconceptions.
	I agree with the comments of the right hon. Member for Maidenhead (Mrs. May) that it would be much easier to deal with questions of allowances if elements of the media did not endlessly misrepresent them as part of our income. That is acknowledged in paragraph 1.12 of the SSRB report:
	"Some observers are quick to conclude that an MP is paid too much, particularly when looking at the headline total of salary plus expenses."
	I also counsel Members that so-called transparency is no magic solution. The situation in Scotland has demonstrated that only too clearly, to the extent that one MSP was attacked for spending money on coffee in his constituency office.
	The matter of pensions will be considered elsewhere, and the hon. Member for Bournemouth, West (Sir John Butterfill) is in the Chamber and will no doubt comment on that. I am concerned, however, about reference to so-called gold-plated schemes compared with other public sector schemes. We as MPs have a high contribution rate, much less security of tenure and later retirement. We do not have the early retirement enjoyed by many of the uniformed services—I hasten to add that those schemes are provided for understandable operational reasons. At the same time, however, we abrogated the option of retirement at 60 on the grounds that that example would be followed by those in the wider public sector. Unfortunately, they have not found that example particularly inspirational.
	To return to pay, the basic facts are rightly outlined by the SSRB in paragraph 3.2, which records that the evidence given on Members' behalf by the advisory panel showed that
	"MPs' pay had not kept pace with the Average Earnings Index since 1997, and had failed to match the Retail Prices Index since 2003."
	The PricewaterhouseCoopers study—which, admittedly, involves some difficulties—showed that the gap between MPs' pay and that of private sector comparators had also grown.
	As paragraph 3.18 of the SSRB report explains, unlike the annual increases of many in the public sector, ours is an actual earnings increase. Why? Because we do not have the increments, performance pay or other forms of pay progression that are common and, indeed, increasing in many parts of the public sector. That is why the mechanism that linked us to certain pay bands became so unsatisfactory in the end.
	I must say in parenthesis, and partly in mitigation, that I only became chair of the advisory panel after the last election. I was astonished that anyone would agree to be linked to someone else's pay rate rather than their earnings: I had thought that that was in chapter one of the shop stewards' manual. Members will recall, however, that we did get a cycling allowance out of the last settlement.
	The SSRB report acknowledges the problem, but I find it disappointing that the board did not want to address it earlier. The report states quite openly that it
	"did not wish to distort the senior civil service pay system simply to produce a more appropriate result for MPs",
	although it seems to have been content to distort our pay system as a consequence. As we all know, we received only 0.66 per cent. last year. That is worth repeating, just so that the public get the message loud and clear.
	The basic facts are these. If our salaries had kept pace with the retail prices index in the last five years, we would have not our current salary of £60,675 but a salary of £64,418. If our salaries had kept pace with average earnings, we would be on £66,170. If our salaries had kept pace with the public sector average earnings index, we would be on £67,684. The problem has been exacerbated in the last three years, with increases of 2 per cent., 1 per cent. plus 1 per cent. staged over the year and, most notoriously, 0.66 per cent. last year.
	The SSRB has acknowledged part of the problem, and we should be grateful to it for that. It has taken on board not just the comments of the advisory panel, but those of many individual members who not only followed our evidence but made inquiries in their localities about the pay enjoyed by directors of services in their local councils, head teachers in some of the larger schools and so on. At least in my experience, many were slightly surprised by the change, and the rate of change, in those jobs over the last few years.
	Unfortunately, the SSRB proposes to remedy that by means of a mechanism that I still find confusing. It talks of linking us to the average percentage increase in the base pay of the senior civil service, by which, it says that
	"we mean the amount by which the average base salary of all SCS members increases year on year as a result of individual performance awards."
	It then states that the amount
	"excludes non-consolidated bonuses for which SCS members are also eligible."
	That sounds to me like an unnecessary complication, possibly containing the seeds of further difficulties in the future. It would have been much simpler, even within that indicator, to take a straightforward figure, namely the amount by which senior civil servants' take-home pay rises during the year. I hope that Sir John Baker's further study will take that into account. We should also ask him to examine the question of remedying the considerable shortfall.
	It also concerns me slightly that the report does not really capture the life and work of Members of Parliament, although, as we know, the subjects are very much intertwined.

John Spellar: A sovereign Parliament would make a decision before the recess that our pay increases should be linked to a particular indicator. At some stage in the long distant future, if that broke down, something would have to happen to it.
	In a sense, there is a mechanism to deal with failure, and we have had one failure with the links to the senior civil service. That mechanism is that Sir John Baker should consider forming a new body. We must make it clear that such a body should not be designed to make endless reports on pay but to deal with any failures in the system.
	There is an unspoken question about who will decide whether there has been a failure. Will it be the House of Commons and the MPs, or the Treasury? Nothing is perfect about any form of pay-setting. However, such a solution would get rid of many of the problems and difficulties that we face, particularly when we have to vote and argue about our pay. That is a particular problem if it is linked to a factor over which we do not have any direct influence, whether it is an index based on prices or earnings—that is why I have suggested a fairly wide index.
	It is important that a clear message goes back from all parties, including the Government that the increase should be implemented according to the percentage increase that has taken place. That is why the mechanism is so important, as it effectively takes the decision out of the hands of Government and puts it into those of the Department of Resources—which used to be known as the Department of Finance and Administration—which will operate under the directions of a resolution of the House.
	My final point has been made by a number of other hon. Members, but it is worth reiterating. This has dragged on too long. The SSRB was commissioned to produce the report in July 2006. It reported in July 2007 and we are debating the report in 2008. I urge the Leader of the House and the Deputy Leader of the House, when she replies, to be clear and explicit that the timetable for the report will be that it should be received, published, debated and voted on before the summer recess.

John Spellar: There were a number of indications from the Leader of the House that she hopes to get the report received, published, and voted on before the summer recess. I want the report to be received by the end of May, as a preference, and by the first week in June as a necessity. It should be published at that stage and debated and voted on during the end of June or beginning of July.

David Maclean: My hon. Friend is respected in all parts of the House for the tremendous amount of work he has done in chairing our pensions committee. No one can speak with more authority on House of Commons pensions than he can. I hope his words will carry weight in all parts of the House.
	I quote the examples from the report not because I want us automatically to link our salaries to them, but to show where I believe the SSRB has slightly misdirected itself. I hope that if we on the MEC can do a review, we would not tie our hands in such a way, we would consider the workload and the hours that we work in addition to the other factors, and we would look at a basket of comparable jobs in the public sector and the private sector, and not limit ourselves to the basket that is included in the report. There is a range of other comparators that could be included in the basket. From what I have seen of the staff of the Fees Office and the Directorate of Resources and the expert researchers in the House of Commons Library, I believe that we could come up with recommendations as good as, if not better than, those that Sir John will produce.
	And there will be something else. Sir John will make his recommendations to the Government. That is fair enough, and I accept entirely the assurances of the Leader of the House that the Government will not sit on the report for six months this time; it will be brought quickly to the House. If we, the Members Estimates Committee, had given the stamp of approval to bring forward proposals to the House today, we would be reporting to all Members—to the House. At some point it would be up to the House collectively and all Members to grasp the nettle of what we had proposed. If all colleagues thought that what we proposed was nonsense, it would soon be binned. If they thought it was right, we could go ahead with it.
	I know that my amendment refers to an independent pay review body. I am not tied to that. I had to submit my amendment rather hastily. If I were to redraft it, I would refer to an independent pay mechanism. That is what we must seek to achieve—a mechanism that could be linked to a basket of salaries or something else, and which would be uprated each year by the Fees Office. The Directorate of Resources would look at the comparators and the mechanism and automatically adjust it. If at some future date it went all askew, the House would have to grasp the nettle and do something about it. Any independent pay review should report to the House, not the Government. That takes the Government's hand out of the matter.
	I will support the Leader of the House this afternoon on her motion of expression of opinion. I have no wish to rock the boat on that. However, I beg those on the Government Front Bench to accept my amendment and let the MEC have a go at producing proposals. I know that the Leader of the House said that we could produce a memorandum. We do not need the authority of the House to produce a memorandum, a document or a review. The MEC can do that, but we do not have the automatic right to have it considered on the same day as Sir John's report. It could sit on the shelf in the Vote Office. Yes, we could take the guts out of it and table it in an amendment, but as the MEC is chaired by Mr. Speaker, we cannot have an amendment advocated in the House by a Committee of which the Speaker and the Leader of the House are members.
	I seek a commitment from those on the Front Bench. I would happily withdraw my amendment. I do not particularly want a vote on it, but I know that a head of steam has built up from colleagues on both sides because what I am proposing is reasonable and innocuous. If we produce a memorandum or a document of some sort—we are not in the business of an alternative review; I am not rubbishing Sir John at all—please let us have it considered at the same time as Sir John's report, as an alternative. That would remove a difficulty for the Government and for everyone else, except perhaps myself given the work load of the MEC in producing this.

Nick Harvey: We are having an interesting debate on this issue. It is perhaps not as heated or exciting as some that we have witnessed in the past, because in some respects, there is a great deal of consensus around the House.
	To the extent that there is any tension or disagreement, it seems to cut to the question of the relationship between this sovereign House and the Government as it affects the matters before us. I should like to point out to Members the difference between the administration estimate—that is, the budget spending line that runs the House of Commons, employs the House staff, and is responsible for the fabric of the building and security—and the Members estimate, which we are discussing. The administration estimate is the property of this House. The House is responsible for it and it is administered by the House of Commons Commission. Members ask questions of the Commission about how those moneys are used. The Commission produces an annual report that Members can debate and lays before this House annually an estimate for the running of the House.
	The Members estimate, which is the budget spending line from which Members pay and allowances are paid, is not the property of this House but is deemed to be the property of the Government and the Treasury. That, at least, is the theory. One might ask various previous Leaders of the House who have been responsible on the occasions of these debates on SSRB reports whether they felt that they had control over the Members estimate. There have been some memorable debates in which the Government have not had their way and this sovereign House has shown that it is indeed responsible for this line of spending. In reality, the Members' estimate is neither fish nor fowl—it exists in a sort of limbo. Only a Minister of the Crown can propose an increase in expenditure against it. That is why expressions of opinion, whereby other Members can make suggestions, sit alongside the motion.
	On the question of a mechanism for deciding pay, I have no problem with what the Government are doing. They have proposed that for the current year, 2007-08, the pay rise for Members should be staged in such a way that its value is only 1.9 per cent. over the course of the year. There does not appear to be any great controversy about that. Nobody has argued against it or tabled an amendment suggesting anything different, and the Front Benchers of all three parties have urged Members to support that restraint at this time. The Government have also concluded that it would be right to have conducted a review that attempts to produce a new mechanism that does not require MPs to vote annually on their pay for the coming year. There is a general consensus around the House that if a workable system can be proposed, that is a good idea that we would all welcome.
	There is a problem, however, in relation to how the Government are going about this. In my view, the report that they commissioned from the SSRB should have been a report to this House, but because of the peculiar relationship that I have described as regards the Members estimate, it was a report to the Government, which they then sat on for more than six months. We all speculated that it must be a real hot potato, and that there must be something absolutely diabolical in the report that was causing the Government terrible political angst, which meant that they had to sit on it for six months. When the report came out I read it, re-read it and read it again, and wondered what on earth had caused the Government so much difficulty. That is the first grievance I wish to log about the way in which they have done their business.
	I wish to flag up some serious misgivings about what the Government now propose. They are asking us to rescind and tear up the resolution of July 1996, which has governed how such matters are dealt with for the past 12 years. Effectively they want us to sign them a blank cheque. We have to buy a pig in a poke, leave matters with them, and they will have a review conducted by someone of their choosing who will report back to them. We all just have to relax: it will all be okay because they will see us right.
	I do not think that that is a sensible or logical way for the House to proceed. That is why there is an amendment on the Order Paper in my name, and in the names of other Members who serve with me on the Members Estimate Committee, suggesting that we ought not to rescind the existing arrangement until we have seen what the review recommends, and resolved as a sovereign House what we are going to do about it, and what the arrangements should be in future. It is simply logical not to rip up the old system before resolving what the new one will be.
	More specifically, the Government have made no suggestion about what MPs' pay rate should be for 2008-09. That is why my amendment suggests that while we are waiting for a new system to emerge, we should have what is suggested under the existing system—what the SSRB recommended—for next year. It is the only proposal on the Order Paper that makes any provision for any pay rise next year.
	During the course of the debate, we have heard from the hon. Member for Manchester, Central (Tony Lloyd) and the right hon. Member for Warley (Mr. Spellar) various rather more detailed suggestions about the task that lies before Sir John Baker—what he will do, what he will recommend and what might come back before the House in July. I have no knowledge of that. I have no particular problem with that state of affairs; I am not sulking because things have been said to those two eminent Members that have not been said to me, but it seems odd that we are being asked to sign up to this change when none of the information concerned seems to have been shared, through the usual channels or by any other means.
	Sir John is being asked to return in July with a recommendation for a new mechanism. There is no suggestion as to when this mechanism will take effect, and it was more or less hinted in response to certain interventions that he will make some sort of recommendation for a pay rise for 2008-09. However, I am puzzled by that, because if Sir John Baker comes up with a new mechanism that will operate in future, and part of that mechanism might be the creation of a new body, when will it be created? When will it start to establish the comparators, mechanisms and so on? It will clearly not be possible to do that by July, and unless the new mechanism is determined by Sir John Baker doodling a sum on a pad, there is no possibility of any proposal of a pay rise for 2008-09 by the time we have the debate in July.

John Spellar: Again, we are in danger of mixing up two elements. One is the question addressed by the SSRB of the extent to which there is a need to redress the deficiency when comparison is made with the comparators—the catch-up, in other words. The other is the question of an index by which increases would come in automatically. The question of having a body to examine what happens if such an index fails is another matter. I hope that the Deputy Leader of the House will make clear that there is no proposal to set up a permanent SSRB to report constantly, only a body that deals with the index. There are two separate issues. The hon. Gentleman could deal with one—and even with the future index—but they are separable.

Michael Spicer: The hon. Gentleman is on exactly the right track and is making the point about which I tried to ask earlier. Would not it be best if the Deputy Leader of the House intervened now, because that would help matters considerably?

Nick Harvey: The sooner the matter can be clarified, the better. I tabled an amendment precisely because of the vagueness and lack of information from the Government about what is intended to happen with the review and the pay settlement for the coming year. If the Government could clear up some of those matters, it might be unnecessary to push my amendment to a Division.

Nick Harvey: The hon. Gentleman makes a good point. Inviting Sir John to undertake the review is interesting, given the difficulty that the Government seemed to experience for the past six months in digesting his previous utterance. I believe that the House should control the members estimate, as it controls the administration estimate, and that the House, not Her Majesty's Government, should decide to whom it remits such matters for review. I therefore support amendment (c) to the motion before the House, which provides that the Members Estimate Committee, as the only body in the House that could reasonably do the work, should examine the issues at the same time as the review.

Nick Harvey: I entirely agree with the right hon. Gentleman, and this is why. The SSRB has just sent us a detailed report covering all aspects of hon. Members' allowances—I say "just", but hon. Members will know what I mean; it actually sent it to us last July. There are some good ideas in that report and the motivation for making many of the recommendations in it was entirely laudable. Regrettably, however, some of them are slightly less practical than they might be, and have all sorts of unintended consequences that cannot possibly have occurred to the authors of the report.
	For example, having totted up what the changes in the office rental and staffing arrangements would mean for me, I discovered that I would lose £12,400 a year from my allowances. I do not believe that it was the intention that the SSRB would have that impact on anybody's budgeting, but it did. The SSRB brought to have some objectivity and independence; it commissioned people to look at things in markets out there in the real world, and produced a report with some good ideas, but also with some glaring anomalies, which the MEC will be required to consider. If that report is the only one before us when we come back in July, there is every risk of further complications, unintended consequences, inaccuracies, anomalies and other inconsistencies, which will put the House in a difficult position.
	If that report is the only proposition before us, we will again be presented, on a "take it or leave it" basis, with something that we know to be riddled with flaws. It would make far more sense if the MEC, which can see the flaws in the current proposals on allowances, were allowed to put in its tuppenceworth on the subject of a pay system for the future, because when we hold that debate, it would benefit the House to have that alternative before us. I cannot comprehend why there could conceivably be thought to be a problem with that.
	In general, there were many suggestions in the SSRB report that we can take forward. I have stressed that the MEC is only too willing to try to iron out some of the problems. We have heard from Members on both sides of the House what some of the practical problems are, and we will earnestly use our best endeavours to put them right, and to come back to the House at a later date with a workable set of proposals on which Members can take a view.

Ken Purchase: My hon. Friend mentioned his previous proposal for a pay formula that would have resulted in our pay being linked to certain professionals who have done rather well. He now suggests that our pay increases should be linked to those of pensioners. Does he believe, however, that it would be reasonable for the Government ever to forgo the right to intervene in MPs' pay, or for this House not to recognise its role as a sovereign body, in order that our pay increases, whatever the circumstances outside, should actually reflect what is politically possible rather than being linked to dentists, doctors or whomever? I hope that my hon. Friend will take this in the spirit in which it is given. We really need to understand that the Government have to govern, and they have to have the right to intervene wherever and whenever that is necessary.

John Maples: I think that I entered the House a little later than the hon. Member for Sunderland, South (Mr. Mullin), but I remember that one of the very first debates that I attended in 1983 was about Members' pay, and exactly the same issues that have been rehearsed today were rehearsed then. We sensibly decided on that occasion to link pay to a grade in the civil service. I did not think that it was particularly ambitious to link our pay to 78 per cent. of that of a principal officer—just one above the fast-stream entry grade—but, nevertheless, it resolved the problem for quite a long period.
	I want to talk about two issues. One has had a lot of attention and the other has not, so hopefully I can shorten my speech. The one that has had a lot of attention is what the uprating mechanism should be. As the hon. Gentleman said, I personally think that it should be simple and comprehensible, not just to us but to our constituents. I would have thought that it should be something like the annual percentage increase in public sector pay. The Government are concerned that our pay must take account of their public sector pay policy, and that mechanism would. The Government are in one way or another negotiating if not setting public sector pay, and we would be one year ahead of it—or behind it, whichever way one looks at it. I believe that if our uprating on, let us say, 31 March every year were linked to the average increase in public sector pay over the previous 12 months, that would take the problem away.
	The Government, whether Labour or Conservative or anything else, must keep their hands off this matter. When they interfere, they simply make the problem worse for themselves. They lower the increases for three or four years, which they think helps. Actually, I do not think that the press care; whatever we do, they will be unhappy with us. Whether it is 1 per cent. or 10 per cent., we will get the same bad publicity. If the Government interfere to suppress annual pay increases—I hope that the Deputy Leader of the House takes this on board—they can do it for four or five years, and then we will insist on having a whacking great catch-up increase and it will look awful. Were the increase 2.5 to 3.5 per cent. a year, or whatever the general rate of increase in the public sector was, that would satisfy us and the public, and would not create these horrendous problems. Linking it to public sector pay is the way to go, but I would be happy to consider any other index that is suggested.
	I must pick up a point made by my right hon. Friend the Member for Penrith and The Border (David Maclean). This is a House of Commons matter, not a Government matter. The hon. Member for Sunderland, South said that the trouble is that the Government control the matter, but they do not. When it comes back to the House, I hope that some amendments will be tabled by Back Benchers, and that we will be allowed to vote on them. The Government do not control this; they control about 100 votes, but the rest of us can speak and vote for ourselves.
	A fair amount of remarks have been made about the erosion in our pay, and I do not need to reiterate those. Had the mechanism that we had agreed been followed, however, we would now be paid between £65,000 and £66,000 a year. Were we to continue to allow the erosion of our pay relative to other people, or to the public sector, that problem would sooner or later get so bad that it would have an effect on the sort of people who get into this place. If we want to fill it with people who are either fanatics or rich, that is the way to go, but it is not sensible. There are people who would do the job for nothing—I would be happy to present "Newsnight" for nothing—but whether they are the right people is a different question. It is not the right way of qualifying for a job. We certainly do not want to fill the place up, as we did until about 100 years ago, with people who have significant other sources of income.
	I want to turn to the second point. Once we have the uprating mechanism agreed, what is the starting point? Is it what we are paid now? Is it £66,000, £66,170 or what it would have been if we had had the uprating as agreed? Is it something different? I do not think that the study done for the Baker review was right. Comparing the skills that Members of Parliament bring to the job is not the right way to decide what they should be paid. We 646 Members constitute a huge variety of people. Some of us have enormous earning potential out of this place, and some of us do not. Some of us have professional qualifications, and others do not. But we all come here equal, and while we are here we are all equal, and we all need to be paid the same. Trying to compare the skill levels and the hours of work will not produce a satisfactory answer.
	What we ought to do is look at what other people in the public sector are paid. I made a start with the people employed by the House of Commons Commission, all five members of which have spoken in this debate. It employs just over 1,500 people, of whom 92 are paid more than Members of Parliament. I expect that all of those people are properly paid—at one stage, when I was in the Treasury, I was responsible for civil service pay and an enormous amount of attention was given to trying to get the right pay grades to recruit, retain and motivate civil servants, and I am sure that a lot of attention is paid to their salaries. But is it right that 10 people in the Department of the Official Report are paid more than us, along with 10 people in the Department of Finance and Administration, 21 people in the Clerk's Department—that might be more understandable—13 people in the Information Communications and Technology Department, two people in catering, six in the Library and nine in the Serjeant at Arms Department? There is a status issue. We are not just putting in hours of work, being social workers for our constituencies, or giving vent to our views on the great events of the day. Members of Parliament have some sort of status as well. We have to consider where that should place us on the public sector pay scale. I find it difficult to believe that my status, and that of all of us, in the public sector is less than 92 people who work for us for the House of Commons Commission.
	I have looked at one or two other areas of the public sector—I do not pretend that there is any system to the areas that I have examined. We are paid at the low end of what a lieutenant colonel in the Army or commander in the Navy is paid. We are paid at the low end of what a police superintendent is paid. Lieutenant colonels in the Army, commanders in the Navy and police superintendents are often—this is certainly the case in the armed forces—bright 38-year-olds who are going somewhere. Is that the right end of the pay scale for us, or should we be paid in conjunction with a higher grade?
	When we look at pay in local government, we really do find out how badly paid we are. There are 852 officers working in 34 county councils who are paid more than Members of Parliament. Our pay is the same as about the middle rate paid to what is called a third-tier manager, and the third tier does not include the chief executive. The order is chief executive, first tier, second tier, third tier. There are 1,000 officers in district councils who are paid more than us, and we are slightly higher than the top end of the second tier. The order is chief executive, first tier, second tier. Then there are the metropolitan councils, the unitaries and all the rest. Nearly 7,000 officers in local government are paid more than Members of Parliament. Is that really how we see ourselves? Is it the right place for us to be?
	There are 4,000 members of the senior civil service who are paid more than Members of Parliament. I do not agree with the methodology of the PricewaterhouseCoopers study, but I was interested by the suggestion that our comparator was a grade 1 civil servant. For those of us who go back a while, that is equivalent to the old grade 3 or grade 4 under-secretary level. The average pay of grade 1 civil servants is about £71,000 a year and their average bonus is about £10,000, so we are looking at about £80,000 a year. There is a grade 1a, at which the pay is about £10,000 or £12,000 more.
	It may be a bad idea to take a look at the pay scales of the judiciary, but let us look at the bottom end, level 7. The chairman of an employment tribunal or an immigration judge receives £98,000 a year. At level 6, a Land Registry adjudicator or the regional chairman of a mental health tribunal—we are not talking about the Court of Appeal or the High Court—is paid £117,000.
	We will all have views on where we sit on the scale, but I think we must consider where we as Members of Parliament see ourselves in relation to other people in the public sector. I very much hope that we shall be able to choose the right level in future, and I shall seek to table amendments to that effect when the issue returns to the House. I think that we should table a series of amendments suggesting levels £5,000 apart rising from £60,000 to £100,000, because I consider the right amount to be somewhere between the two. My own view is that it is in the £75,000 to £85,000 region, but I think there should be a series of amendments on which we can vote. We will take a lot of flak once, but we will settle the issue of what the base should be before whatever uprating mechanism on which we agree comes into effect.

John Maples: I was simply offering a way of introducing a productivity gain to finance the pay increase, which is something we demand of other people. Abolishing the communications allowance would go a long way to addressing the problem.
	Let me conclude by reiterating my two main points. First, we need an uprating mechanism that does not involve annual, or even biannual, decisions, but that just happens automatically. The one I suggest is the average increase in public sector earnings during the previous year. Governments would have to agree to take their hands off, because although they might gain something for a year or two, they would lose it further into the future. Secondly, we have to set a base salary from which to operate, and I do not believe that the current salary is the right one, as there is a lot of catching up to do. We should set a salary that we think is right by looking at the pay of what we consider to be equivalent public sector posts. That should be done on a free vote of the House of Commons, with a range of salaries to choose from. I have given the salaries of some posts, and I think Members will be surprised to find that 7,000 local council officers are paid more than us and that the chairmen of immigration tribunals are paid almost £100,000 a year.

Andrew Dismore: I do not want to say a great deal about the salary issue. I will support the Government's expression of opinion, but I was very taken by the remarks of my right hon. Friend the Member for Warley (Mr. Spellar) and the right hon. Member for Penrith and The Border (David Maclean). It is difficult to find a comparator for us, because we have a unique job. No other job in the world is like it, in terms of the hours we work do or the demands on us. To say that we are in charge of our own work load is to misunderstand completely our situation.
	I make the point about us being unique because it is one of the reasons why we have problems with the Senior Salaries Review Body's examination of our allowances and pay. It is also why I agree with the right hon. Member for Penrith and The Border that the Members Estimate Committee should address this matter. The only people who truly understand our job are other MPs. For other MPs to look at some of the difficulties involved would be a good way forward. I also urge the House to look at the amendment in the name of the hon. Member for Cities of London and Westminster (Mr. Field) on the London supplement.
	I want to focus on London issues. As chair of the London Labour MPs, I put a detailed submission to the SSRB on our behalf. It addressed allowances primarily, but the supplement is also an important issue. According to Library figures of a couple of years ago, the differential between the rates of pay in London and the rest of the country is more than 22 per cent. It is worth noting that the differential in London weighting premiums was also higher.
	My main concern is the lack of reflection in the IEP of any London element. It is self-evident that office rates in London and some other big cities are far higher than elsewhere in the country. I got the Library to do an analysis of that, which I submitted to the SSRB. The differential between London and other parts of the countries can be four times as much. Consequently, London MPs generally end up with poorer quality or much smaller premises than MPs in the rest of the country. Alternatively, they end up subsidising the cost out of their own pocket, from elsewhere in the allowances or sometimes out of party funds. A number of MPs have found that they have been unable to maintain their constituency office and have closed it down with a view to moving their staff back to Westminster. Other, newer Members never opened an office in the first place simply because they could not afford the rents.
	This is not just a question of the rents, because a lot of the office running costs incurred in the constituency are met on the parliamentary estate. For example, the telephone bill for most constituency offices is substantial, but it is paid for free if the phone calls are made from Westminster. We ought to try to incentivise Members to have a constituency office. I do not want a system whereby those who decide not to have an office are penalised, but the present system has the perverse incentive of pushing people back on to the parliamentary estate, because if one does not spend one's IEP on rent, one can spend it on other things, such as an annual report or more staff. The net result is that those who have a constituency office end up rather worse off.
	A system based on a square footage allowance is the way forward, but the SSRB's proposals are far too complicated. It is therefore right that the matter should be referred to the MEC for consideration as to how the system could be operated. It is important that our system reflects office rents separately from the remainder of the IEP expenditure and reflects the fact that rents differ around the country. I hope that the MEC examines the issue in a way that reflects those two important factors.
	I am pleased both that the staffing allowance is going to be increased in respect of additional numbers of staff and that an element of London weighting will be involved. It is bizarre that London weighting was effectively abolished last time. That was grossly unfair to our staff who work in London compared with those who work elsewhere in the country. The net result was that staff ended up being paid less than the market rate—that is inevitable even on the new rates that are being proposed—or that Members employed fewer staff to meet the higher rate or our staff ended up not being looked after as well as they should have been.
	There should be a London allowance to reflect realities in the labour market, but it should be payable to non-London MPs' staff who work at the palace as well as to London MPs' staff who work both at Westminster and in their constituency. It should also reflect the differentials in work load that some of us face, particularly those of us who represent some of the inner-city constituencies. As a result of the impact of multiple deprivation, such constituencies tend to generate significantly higher levels of complex case load than elsewhere.
	I get very cross when people talk about how generous our pension scheme is. It is generous for people who work in the House for their full working life and who do not come here with prior pension arrangements. I had worked in the private sector for some 20 years prior to coming here, and I had built up a quite substantial pension pot of my own, despite the fact that Equitable Life victimised me somewhat and took a large chunk of it away. I have calculated that the byzantine way in which the retained benefits system works means that if I am able to complete service up to the age of 65, when I retire I will have paid seven eighths of my pension and only one eighth of it will have come by way of an employer's contribution. Most pension schemes in the outside world would be far more generous to their employees than that, which is why we need to do something serious about the issue of retained benefits. The arrangements are unfair to those who come here having worked in the outside world and having built up pension arrangements elsewhere. The way in which our pensions are effectively taken off us to subsidise the House's pension scheme is peculiar.
	Overall, the Government's proposals are fair and reasonable. It is appropriate that the MEC examines the allowance.

Andrew Dismore: The hon. Gentleman took the words right out of my mouth. That was exactly what I was about to say. I hope that the Government will accept amendment (a), which would mean that that the London supplement would be considered by the MEC, too. I hope that they will consider the proposal put forward by the right hon. Member for Penrith and The Border and will come forward with alternative mechanisms to reflect the unique nature of our job. I do not think that anything in the outside world can reflect that, as we have seen from all the SSRB studies and other contributory research. Only we understand the way in which we work. If we had two reports to consider simultaneously—one complied objectively by someone from the outside world and the other compiled by those with experience of the House—that synthesis might provide the answer for which we have been searching for so long.

John Butterfill: It will not surprise right hon. and hon. Members that I shall start by speaking principally about the parliamentary contributory pension fund.
	I want to place on record my thanks to the Prime Minister for sending me an advance copy of the report, although I received it only a week before everybody else. Because I then had to plough through some extremely complex detail about the recommendations on the pension fund and the Watson Wyatt report, it would have been helpful, and I would have been able to make an even better contribution than I am able to make today, if, as I had requested, I had been sent the embargoed copy of the report some weeks before that. That would have allowed me, the staff in the pensions unit and the Government Actuary to put together a more considered response than that which I am able to give. In the future, if I can be trusted with an advance copy, that would make it much easier for us all to have a better debate on the subject.
	Unfortunately, as I have already said in an intervention, it appears that there are many factual errors in the Watson Wyatt report. Perhaps I should deal with them first, as it is important to put them on the record. In volume 2, on page 76, in paragraph 2.18, the Watson Wyatt report gives its view on how the deficit in the scheme arose. It states that it arose
	"as a result of a divergence in the experience of the PCPF since the previous valuation (primarily due to lower investment returns than expected) and changes to the assumptions"—
	about future benefits and so on. That is wholly inaccurate and is contradicted by paragraph 2.19 and the graph that accompanies it, which is chart 2.1. The graph shows that successive Governments took contributions holidays between 1989 and 2003. Those holidays were absolutely massive and, in the opinion of the Government Actuary, more than contributed to the current deficit. Indeed, at the time of the Government Actuary's last evaluation, he concluded that had it not been for the contributions holidays, the PCPF would have been £5 million in surplus.
	The record needs to be corrected on the reasons why the scheme is in deficit. The Government, on behalf of the taxpayer, have been failing to make its correct and recommended contribution to the scheme. Even chart 2.1, it seems to me, contains an inaccuracy. My recollection from when I came to the House in 1983—no doubt you, too, will remember this, Mr. Deputy Speaker—is that we then paid 9 per cent. for a six-year scheme. It might be that the off-blue section of the chart, which is supposed to represent our contributions, is also inaccurate. I have not had the opportunity to check that in detail while I have been speaking.  [ Interruption. ] I hear several hon. Members confirm that that is a fact.
	Messrs. Watson Wyatt also say, on page 91 of volume 2, that the build-up of benefits above the two-thirds maximum post age 65 contributes significantly to the costs. It appears that no one has told them that in 1989 we abolished Members' right to accumulate post-65, apart from those elected before 1 June 1989. The overwhelming majority of hon. Members, therefore, do not have the right to accumulate past 65, and the remaining few who do will be phased out. However, that has not been taken into account in the calculations.
	The next error appears in paragraph 2.3 on page 72. The final bullet point of that paragraph states:
	"Members can commence receipt of their pension whilst remaining an MP".
	That would be great news if it were true, but of course it is wholly untrue. Members cannot draw their pension while remaining an MP, and have never been able to do so. If it were true, the costs of the scheme would be greatly increased, but it is not true.
	Indeed, in light of the Pensions Act 2004, we had to make some special arrangements for those Members aged 75 and over, of whom there are a handful. The Act meant that they were required to take their tax-free lump sum at the age of 75 and commence drawing their pension, as otherwise they would lose their right to a tax-free lump sum. The special arrangement that had to be made for them was that they would be deemed to be drawing their pension from the age of 75, even though they would not actually receive it. However, they were able to take the lump sum, with the rest being held in escrow, so to speak: even though they were not getting the money, they did get increases in line with inflation as though they were getting it, so that the final pension level was correct when they eventually started to draw it. Again, I am afraid that Messrs. Watson Wyatt are labouring under a number of misapprehensions about elements that greatly affect their assessment of the scheme's cost.
	Lastly, I invite Members to turn to page 71 of volume 2. Table 2.1 repeats incorrect assumptions by stating that the normal retirement age is 65,
	"although members can continue to build up benefits after that age".
	Only a few Members can do that, but the assumption is that all can. The table also says that the maximum benefit is two thirds of pensionable salary,
	"although accrual can recommence if the member is older than 65"—
	another repetition of the same erroneous assumption. That seems to be quite a serious series of errors in the report's assumptions.

John Butterfill: I shall refer to that later, if time permits, but it is important to get the facts on the record. Watson Wyatt apparently bases its calculations on the accrual of one year's pension for an MP aged 54 who serves a further two terms, which totals nine years, and who draws a pension at the age of 65. That is by no means a typical length of service for an MP. All those things mean that some of the conclusions are wrong. The report also does not take any account of the effect of retained benefits. As a number hon. Members have said, retained benefits substantially inhibit the ability of Members to draw money from the pension scheme. My staff—in conjunction, I think, with the Government Actuary—estimate that that could overstate the pension cost by between 3 and 5 per cent., which is rather a lot. It has not taken into account Members who reach the maximum benefit limit of two thirds of pay. Again, that could overstate the pension cost by another 1 per cent.
	Watson Wyatt has not made any allowance for the phasing out of the early retirement provisions. The press and the general public, who are informed by the press, do not remember that on 4 November 2004 we voted to end our generous early retirement arrangements; they were to be phased out from 2009. The Government were asking civil servants and all those in the public sector to go down a similar route, although they proposed that the date for those groups be 2013. Faced with the threat of strikes across the country, the Government backed down. We made that gesture, thinking that we were leading the way and showing that we were not frightened of making the change. We thought that we would get some credit for that, but we did not—not with the public, and not with Messrs. Watson Wyatt.

John Butterfill: I do not have the figures to hand, but it is a very small number. Only a minority of Members ever go the full distance. The average Member comes in at the age of 42 and leaves at the age of about 52. Very few Members will ever get to the full final salary, and that will not change much because of boundary changes and Members losing their seats. The media think that we backdated the fortieths, but we did not. I would still have to work in the House for 31.5 years to get a full pension. Only those Members who have come into the House most recently since we moved to the fortieths arrangement will not have to work more than 27 years.
	As I was saying, the 26.8 per cent. headline figure of contributions for us is misleading, because it includes 8.7 per cent., which is the sum per annum that is allowed to make up the estimated deficit of £49.5 million, which has arisen entirely from the contribution holidays. That is not helped by the abolition of the tax relief, which the Government implemented early in their life. Our scheme has been affected by that just as much as anybody else's.
	That leaves an actual Exchequer contribution for future service of about 18.1 per cent., which is broadly similar to private sector schemes and other public sector schemes, which can quite often be more. For example, the civil service scheme is costing about 19 per cent. So we are not out of line with either the private sector or the public sector.
	Ours is an unusual scheme in a number of respects. First, ours is virtually the only public sector scheme that is funded by Members' contributions, investment returns—because ours is fully invested—and an Exchequer contribution. So it is unique in that. The other area in which it is unique is that it is not a final salary scheme. It is a scheme based on the salary of the lowliest Back Bencher at the time of retirement. It is true that Ministers or office holders have an additional amount of income and they pay 10 per cent. of that addition into a special account, which then effectively buys them additional years—that is the way it tends to operate—but that applies only for the period, often limited, when hon. Members are Ministers or office holders. They can be very brief careers indeed in some cases. The general public think that Ministers will retire on a pension that is two thirds of their ministerial salary. They do not and they will not, with the exception of the Prime Minister, Mr. Speaker, and, until recently, the Lord Chancellor, although that is now being reviewed. Everybody else retires with a pension that is based upon that of the ordinary Back Bencher. That is unique. When everyone outside says, "Oh, but you are on a final salary scheme," they expect us to have a scheme that is based on our peak earnings in this place, but that is not the case.
	If an MP—even those who have elected to build up a fortieth straight, which is the newer people coming into this House—was to serve 15 years, which is rather more than the average, they would be entitled to a pension of only £22,500 compared with the enormous figures that are estimated by the media, who are extraordinarily badly informed on these matters.
	Earlier, I touched on the problem of retained benefits. Those who had pensionable careers before they came to the House are not entitled to their full parliamentary contributory pension fund pension because of the restrictions imposed, although they could go back to a 1/60th scheme, which is one of the recommendations in the SSRB report. Even as we are, MPs will have paid a higher contribution rate, at 10 per cent., than that made by almost all other employees in the private and public sectors. Indeed, executives in the private sector typically pay less than 6 per cent. for far more generous schemes than are available to us.
	I turn to the report's recommendations. Recommendation 8 relates to the deficit and says that the Government contribution should be limited to 20 per cent. of the payroll. I do not disagree with that, but the Government are suggesting that if they go beyond that, we should either have a full review or any increase in costs should be shared equally between Members and the Government. For the most part, that pattern does not exist outside the House; if there is an agreement that an increase will be jointly funded, it is normally according to the same ratio—for us, that would be 20:10, or two thirds for the Government and one third for us.
	Recommendation 6 is about retained benefits, and I am happy about it because it provides for an arrangement under which reduced contributions would be payable by those who could not get a full pension. That seems fair; at the moment, people are paying quite a lot of money for something that they cannot get. The review body recommends that any additional cost should be at the Government's expense, because they have been gaining from the contributions.
	The Government now suggest in the resolutions that the additional cost should be funded by other savings made by scheme trustees. It is true that we propose to make savings, as we have done before—as we did in respect of early retirement and the abolition of the public sector transfer club. We are now considering the problem of early retirement due to ill health, and think that some of the rules on what constitutes ill health need to be tightened. The Government have suggested that the two things be linked, but I personally do not think that appropriate. The trustees started to do that under their own steam. It is likely, in fact, that the savings made will cover the cost, but I am not sure that they should then immediately be grabbed by the Government so that they can avoid complying with the SSRB recommendation.
	Finally, the Government ask the trustees to consider a whole range of alternatives to the current arrangements. Those include our going to a defined-contribution scheme as opposed to a defined-benefit scheme, and going to a career-average scheme. The latter would not make much difference in our case as we are already on a flat level, linked to the salaries of Back Benchers; we do not have the steep incline that occurs elsewhere.
	The Government also suggest that we should consider ways of sharing the costs. The trustees are perfectly happy to consider all those proposals and come up with ideas on how they could be implemented. However, the proposals are not without their problems. For example, have Watson Wyatt told the Government that if we closed down the current scheme to new entrants and said that they would all have to be on a money-purchase scheme, there would be substantial one-off costs related to the funding of the existing scheme, because no new money would be coming in from new Members? We will need to discuss such issues in future. We will consider them; we are always ready to do so, although it would have been nice if we had been able to, together with the Government Actuary, somewhat earlier.

David Anderson: The speech by the hon. Member for Bournemouth, West (Sir John Butterfill) showed how the debate has gone today, with people of massive experience across the House speaking very seriously about very serious issues. I do not have the experience that he has in the matters that he discussed, but I do have the experience of being involved as a trade union activist and negotiator for the best part of four decades. Going right back to the early 1970s, I was involved in a national strike, as were some of my hon. Friends sitting in front of me. In 1972, miners were getting paid the paltry sum of £26 a week; we went on strike and ended up with the fantastic sum of £35 a week. I go from that experience to the early 2000s, when I was involved in the negotiations on the agenda for change, which covered 1.5 million workers in the health service, and single status in local government, which covered 1 million workers. I would therefore argue that I have, if not expertise, some experience in this area.
	Throughout all those years, I have never seen a pay round so badly handled by a Government. Without a doubt, the Treasury has had its fingerprints over all the public sector pay deals this year, so that we have ended up in the situation in which we find ourselves, both as public servants and as representatives of millions of public servants outside. Nurses should have been given the pay that they were due, because they were covered by a pay review body, as were prison officers, who did not get what they were due either, and ultimately ended up going out on strike; now they are facing legal challenges in this House. Obviously, as a former miner I do not have a lot of time for the police, given the history between us, but on a point of principle they should have been given what their pay review body said that they were entitled to.
	The key thing about pay review bodies is that they were not settled on by some sort of whim, but mainly to try to avert or resolve disputes, and they have been very successful in that. They should have been respected, but they have not been. The sad thing about where we are today is that our pay review body should be respected, but because of how the Treasury has handled the situation in the past nine months, we cannot legitimately say that we want our piece of the cake if our constituents—our fellow public servants—are denied their share of it. We therefore have no option other than to agree to the Government's position on the 1.9 per cent.
	We need to learn a lesson from this—that pay review bodies and deals must mean something. We must have a mechanism that works, but it must be simple, too. My blood ran cold when the right hon. Member for Penrith and The Border (David Maclean), in a very good speech, talked about job evaluation and comparators. When he said that we should look at responsibility, but not at workload or hours worked, I was taken back to 10 years of knocking my head against a brick wall trying to implement the single status agreement in local government, when the very same things were said, and where we have ended up with ordinary men and women facing court cases because they cannot get agreement on equal pay, and suchlike. We need a very simple mechanism, and it is not beyond the wit of people in this Chamber to achieve that.
	I ask my Front-Bench colleagues to listen to what the people on the Members Estimate Committee have said and work with them, because, as was clearly shown by the hon. Member for Bournemouth, West, they have an element of expertise that the so-called experts have not shown. We are where we are, and we need to get away from it; part of that is about involving the people whom we entrust with looking after our own interests.

David Maclean: In view of the firm commitment by the Leader of the House that she and the Government would welcome the Members Estimate Committee producing its own memorandum or report, which could be published for consideration in due course, I do not wish to move amendment (c), Mr. Speaker, and I hope that other colleagues will follow my line.
	 Resolved,
	 That, in the opinion of this House, the system for determining the salaries of Members of Parliament should be reviewed, in particular with a view to removing the need for final decisions on salaries to be subject to approval by this House; and that—
	(1) the yearly rate for salaries of Members of this House, including the additional salaries of chairmen of select and general committees, should be increased (in addition to the increase of 0.66 per cent. provided for in respect of the year starting with 1st April 2007 under the resolution of 10th July 1996 relating to Members' Salaries (No. 2))—
	(a) with effect from 1st April 2007, by 0.84 per cent. of the rate as it stood on 31st March 2007, and
	(b) with effect from 1st November 2007, by a further 1.06 per cent. of the rate as it stood on 31st March 2007;
	(2) from 31st March 2008, the resolution of 10th July 1996 relating to Members' Salaries (No. 2) should cease to have effect.
	 It being after Five o'clock, Mr. Speaker put the  remaining  Questions necessary to dispose of proceedings, pursuant to Order [22 January].

Pete Wishart: I congratulate the hon. Member for Ochil and South Perthshire (Gordon Banks) on securing this debate, which is important for both our constituencies. Although DARA Almondbank is in his constituency, the vast majority of its work force are my constituents from the city of Perth, and it is located less than two miles across our boundary. I share the concerns of the work force and the joint trade unions about the future of this first-class facility. I have had several meetings with local trade unions, and I have spoken with employees and I have met with the management. There is a genuine, general concern across Perthshire about the fate of DARA Almondbank.
	My colleague, Roseanna Cunningham, the MSP for Perth, had a similar debate in the Scottish Parliament last week, in which she attracted cross-party support for the plight of DARA Almondbank. I also understand that the First Minister of Scotland is due to visit in the next few weeks, and there will, of course, be an important visit tomorrow by Baroness Taylor. I also extend an invitation to the Minister: he should come to Perthshire on Burn's day as he would have a fantastic time—but he is probably too busy.
	All of this interest is because DARA Almondbank is vital to the Perthshire economy. In 2006, it was reckoned that it accounted for about 6.4 per cent. of the total employment in the area, and that the Defence Aviation Repair Agency's presence contributed about £38.4 million to the local economy of Perth and Kinross. Perth and Kinross council has had an ongoing watching brief of DARA Almondbank over the past 10 years, and it has seen the extent of its contribution and how key a resource it is for the area.
	The type of jobs it provides is an important aspect of that. Like much of rural Scotland, Perthshire is overly dependent on tourism. I welcome tourism—it is a great industry for my constituency—but it is notoriously low paid and low skilled. The jobs at DARA Almondbank are high skilled and high value—the kind of jobs we do not see too often in Perthshire. It is essential that we hold on to them, and develop them and the skills associated with them, so that we can take more young people into those high-skilled, high-value jobs.
	Disappointingly, the Ministry of Defence has said that there are only two options for DARA Almondbank: privatisation or a managed decline. That suggests a poverty of imagination. The unions and the work force have refused to accept that they are the only two options, and they have put forward a compelling case for DARA Almondbank to be retained in the public sector. I welcome that we are not debating the possible closure of DARA Almondbank; I respect the fact that the facility is to be saved, but what we as local Members want is the best possible outcome for it. We do not want it just to be retained and to remain; we want it to be developed, and to ensure that it goes from strength to strength and wins more of the awards that it is famous for winning, and to develop its skills. That requires our attention within the public sector. I was quite encouraged yesterday when the Secretary of State for Scotland told me during Scottish questions that he would be open to "all" proposals.
	I still hope, even at this late stage, that the joint trade unions' proposals will secure that fair wind, because their suggestion is truly imaginative. The hon. Member for Ochil and South Perthshire touched on some of the things that they are offering. Among them are: the creation of mobile repair teams to service helicopters at bases or at the front line; a change in funding to contracting for capability; and integrating service personnel into the business.
	The joint trade unions have been to Westminster and have met the Minister to discuss the proposals. I understand that they were not particularly encouraged by what he had to say. Perhaps the intervention by the hon. Member for Ochil and South Perthshire in this debate and the emphasis that has been put on DARA will mean that the Minister will re-examine the proposals and give them a bit more of a fair wind.
	We know that the preferred bidder for DARA Almondbank is Vector Aerospace. I do not share the confidence of the hon. Member for Ochil and South Perthshire in that company. It is a small Canadian outfit, and if it acquired DARA Almondbank, its whole output would be doubled. That is how small Vector Aerospace is. It has no track record in UK defence infrastructure, and I have concerns about its ability to run DARA Almondbank effectively.

Pete Wishart: I am grateful for the hon. Gentleman's correction. It still concerns me that Vector Aerospace would almost become dependent on the output of DARA Almondbank. Several questions remain. If this is not successful, what happens to the skilled jobs and to the DARA Almondbank facility? Will the jobs be lost? Will this be the end of an award-winning, first-class facility? We need to be reassured that the jobs will be safe.
	I took some comfort yesterday from Baroness Taylor's comment that she would not permit the ongoing sale to a third party. That gives a measure of reassurance to some of the Almondbank work force, but it would remain cold comfort if the whole operation fails. That question needs to be addressed, given the concern that we have about all this.
	I am grateful for the fact that Baroness Taylor will be visiting DARA Almondbank on Friday. I know that she will enjoy her trip, because she will meet a skilled work force who are totally committed and dedicated. They have provided such an excellent service to front-line defence capabilities and to so many operations in the course of the past 10 years. I only hope that when she speaks to the work force she will listens to their real concerns and to the compelling case to retain DARA in the public sector.

Pete Wishart: There is no scaremongering going on Almondbank. The hon. Member for Ochil and South Perthshire (Gordon Banks) and I have received countless representations from the concerned work force. The Minister speaks glowingly of the private sector's involvement in defence installations, but I remind him that Scotland's experience with privatisations and with the private sector becoming involved in defence facilities has not been particularly positive. One need only look at the Rosyth naval base in Dunfermline to find out what happens when the private sector is involved. The experience is not as positive as the Minister says. It is right that we raise concerns about such privatisations.

Gordon Banks: May I take my right hon. Friend back to the point that he made a few moments ago about the skills base at DARA at Almondbank? The expertise there which, as I said in my remarks, has met and exceeded every expectation of the MOD, makes the site attractive to a private sector buyer, and that same expertise has saved that location from closure and the other rationalisation of DARA that has gone on. Some of my constituents, as well as some of the constituents of the hon. Member for Perth and North Perthshire (Pete Wishart) see it as a double-edged sword—the expertise that saved the site from possible closure may now take them out of the MOD family that they have been in for so long.

Bob Ainsworth: My hon. Friend is right to highlight the issue. We all know from experience in our own lives and in our constituencies that change is always worrying. I can only repeat what I said earlier. The two principles that we have in taking the proposal forward are, first, to maintain and improve support to our armed forces. We must never let go of that. It must always be the overriding first principle for anyone who is interested in the defence of the realm. The second is to make sure that we maintain the skills base that allows us to do that over the long term. If we did not believe that that was possible in this case, we would not be considering the proposal.
	If the sale proceeds, we will expect Vector Aerospace not only to maintain current capability, but to innovate and improve the current service that DARA provides. Vector Aerospace has a good record both in employee relations and in improving performance. I can confirm that it has no current plans for redundancies at either site.
	As I indicated to my hon. Friend, we have looked seriously at the alternative trade union proposals. We do not dismiss the work that they have done. The document is an impressive piece of work. I have read it, and my hon. Friend the Under-Secretary has gone through it in great detail. However, we remain of the view that under the current arrangement DARA is not viable into the future and not viable on MOD Rotary work alone. It needs care and investment, it needs to win other business and it needs to use and exploit the skills that its work force clearly possess.
	The objective of the proposals that we are developing with Vector Aerospace is to generate the best opportunity to secure the business and investment and thereby protect the skill base that is so important to the constituency of my hon. Friend the Member for Ochil and South Perthshire and to our nation's industrial capacity.
	I cannot join my hon. Friend in Scotland tomorrow. I am the duty Minister here in the House. A day in Perthshire might be a lot more pleasant than hanging around waiting for the Whips to tell me what or what not to do. I hope that he will continue discussions about this important matter with Baroness Taylor tomorrow, and I hope that over time we will be able to allay some of his fears and those of the work force at DARA.
	 Question put and agreed to.
	 Adjourned accordingly at twelve minutes to Six o'clock.